My piece on the failings of Africa’s institutional investment community last week drew a lot of interest.
While much can and must be done to address Africa’s relative disinterest in funding early-stage tech start-ups, I must acknowledge the proactive efforts of home-grown, seed-focussed angel investors and venture capital firms that have emerged in the last several years or so.
Case in point, CRE Venture Capital (CRE VC) - a firm headquartered in Johannesburg, registered in the US, and currently managing a fund of around $10 million (R130.2 million) sourced mostly from the US, Europe and Asia. I believe there are lessons to be learned by observing CRE VC’s hustle about how Africa might start to participate more meaningfully in the early-stage funding arena.
CRE VC is a four-year-old fund which invests in technology-enabled start-up companies in sub-Saharan Africa. Pule Taukobong co-founded the venture with his partner, Pardon Makumbe.
In a recent interview for the AfricanTechRoundup.com, Taukobong told me that the company started out as an angel network focussed on the sub-Saharan region.
They called themselves the Africa Angels Network before later reorganising the business to become a full-on VC firm. They are now arguably one of the most active VCs in the region, and some of the better-known businesses in their portfolio include tech start-ups like Andela, Esaja, Angani, Flutterwave and most recently, Yoco.
Taukobong is responsible for the group’s deal flow and performs industry and financial due diligence on both incoming business plans and targeted companies. In the course of executing his mandate, he took a shine to the founders of the Cape Town-based mobile payments start-up, Yoco, long before they gained a reputation for over-delivering on a business plan. This led to CRE VC being one of a handful of investors which backed Yoco with the seed funding needed to take the fintech startup from an untested concept to the successful close of a Series-A investment round last week.
In speaking to Taukobong, I was struck by the importance of being willing to get one’s hands dirty, the value of syndicating investment activities with like-minded individuals and the importance of developing strong ties with established funding partners who are actively invested in more established tech ecosystems around the world.
It’s clear that Taukobong and Makumbe have not shied away from the difficult task of getting down in the trenches with Africans who are diligently producing innovative products and services.
Aside from dedicating a great deal of professional time to sharing their knowledge on various mentorship forums hosted by the ecosystem, and engaging with a handful of the continent’s most exceptional individuals on a one-on-one basis, they also sit on the advisory boards of several of their portfolio companies to ensure that founders make the best possible strategic and operational decisions as they grow their businesses.
The founders of CRE VC have long discovered the power of leveraging networks. There’s little doubt that Makumbe’s Ivy League pedigree and Taukobong’s Kauffman fellowship have come in handy in helping to open a few doors, but they certainly deserve credit for building their venture capital business on the back of bringing together business angels with a shared interest in fuelling African innovation and effectively syndicating investment cash flows. That is no mean feat.
At the World Business Angels Investment Forum hosted in Istanbul, Turkey, some weeks ago, angel investment syndicates from all over the world gathered to share notes.
Speaking at the event, African Business Angels Network president, Tomi Davies, highlighted the importance of promoting co-operative efforts across Africa’s angel investment scene.
Davies underlined the fact that home-grown syndicated angel investment efforts ought to be the bedrock of the continent’s startup eco-system.
Andile Masuku is an entrepreneur and broadcaster based in Johannesburg. He is the executive producer at AfricanTechRoundup.com. Follow Andile on Twitter @MasukuAndile and the African Tech Round-up @africanroundup.